Question

Question2:

1. Elaborate the three most important characteristics of an oligopoly market. Give three examples of oligopolistic industries in Saudi Arabia.
2. What is a patent? If a patent serves as barrier to entry, why do governments issue patents?

Answer 1

Characteristics of oligopoly market :-

1) Interdependence of firms on each other under a system of collusion.

2) There are high barriers to entry .

3) There are few sellers in the market with complete control over supply.

Examples of oligopoly in Saudi Arabia :-

1) Organisation of the petroleum exporting countries (OPEC) which includes Saudi Arabia, Iraq, Venezuela, Nigeria, Kuwait, Indonesia and several others put together control the the majority of world oil Reserves.

2) Licensed islamic banks in Saudi Arabia are a example of oligopoly.

3) Saudi Arabia Power Generation Sector

Patent :-

1) A patent is a right granted to an inventor that moment him to exclude others from making selling on using the invention for a certain period of time. The granting of patent is done by the Federal government.

2) A patent is a temporary barrier to entry that restricts entry and does not prevent it completely. However the cost of entering is very high and thus it is generally considered as a barrier to entry in the market.

3) Government issues patents to encourage forms to pursue research and development that is essential for technological growth and the derivative economic growth for society.